REPORT TO CITY COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Amend the City Loan Terms for the Belovida Apartments to Enable the County to Structure a Hard Loan to Replace the Current Bank Loan to Stabilize the Project and to Increase the City loan by up to $90,000 to Cover the Gap in Repair Costs and Approve the Related Budget Amendment
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
BACKGROUND
In July 2008, the City of Santa Clara appropriated up to $4,955,000 for a loan (the "City Loan") to CORE Affordable Housing LLC and Charities Housing Development Corporation ("Developer") for the construction of Belovida Santa Clara, a new affordable senior housing project with 27 one-bedroom units for residents with incomes ranging from 30-50% of area median income. The project is located at 1828-1878 Main Street in Santa Clara and consists of one three-story residential building (the "Project" or "Belovida Apartments"). The project was initially funded through bond funds, a loan from the City, a loan from the California Housing Finance Authority, a bank loan, and tax credit equity. The City Loan came from set aside funds collected by the Redevelopment Agency of the City of Santa Clara. The City Loan was structured to mature on June 30, 2065 with a 2.75% interest rate to be paid by residual receipts when cash flow is available after covering senior debt service, ground lease payments, and other permitted expenses. The City entered into this agreement in July 2008 to further affordable housing goals pursuant to California Community Redevelopment Law.
The City Loan is secured by a leasehold deed of trust. The ground lease between the Developer and a third-party family trust requires annual lease payments of $48,000 with an annual increase of $500. The lease is set to expire on February 28, 2077.
Residents at Belovida Apartments are elderly and extremely low-income. The Developer has held rents...
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